A history of Straits Settlements foreign trade 1870-1915

Description

The aim of this thesis is to study the growth and
changes in the regional distribution and commodity
composition of Straits Settlements trade in the period 1870-1915. It endeavours also to analyse the character of this trade and to examine the influences that affected it. The thesis can be divided into five sections: Section 1 (Chapter I) The causes for the founding of Penang and Singapore were to serve as bases in the China trade and as emporia in Southeast Asia. The factors responsible for...[Show more] their success were the freedom of the ports, the freedom of trade and their geographical' location. By 1869 the European powers had gained firm footholds in Southeast while the Chinese came in large numbers. Section 2 (Chapters II, III, and IV) The trade of the Straits Settlements is usually described as entrepot while its commercial policy is free trade. But the entrepot trade is only one, although the most important, component of the total trade of the colony. According to contemporary mercantile opinion the large and persistent import surplus as shown in the published trade returns was proof of their inaccuracy, for it was argued that
the colony could not possibly continue to import more than it exported. But by drawing attention to the other components and by distinguishing between the balance of trade accounts, to which merchants were in fact referring, and the balance of payments accounts, which were the pertinent values to be considered, an attempt is made to account for the import surplus.
There were five major reasons for trade to be attracted to the Straits Settlements. Firstly, they were free ports, and taxes that were imposed fell on consumption in the colony and not on the entrepot trade. Secondly, there were no restrictions on trade. Thirdly, the geographical advantage, in particular of Singapore, was not impaired by the development of steamship navigation because it was a logical and an excellent coaling station in addition to being the natural site for a Southeast Asian emporium.
Fourthly, the colony, in particular Singapore, provided special and valuable services to trade, of which the establishment of smelting works and a rubber market are excellent examples. Lastly, the colony was a centre of credit for Asian traders. In addition, the Singapore Chamber of Commerce was an active promoter of trading interests and objectives while the colonial government was aware of the special position of these ports and gave a very sympathetic hearing to mercantile representations. There were three major reasons for Singapore to lose trade. They were: the increasing number of direct steamship services between Europe and the ports of Southeast Asia which reduced their dependence on Singapore; the competition
of these ports as they developed and participated
in the trade; and tariff restriction as imposed by the
French in Indochina. The trade of the Straits Settlements was handled almost entirely by European and Chinese merchants. This trade can be divided into East-West and intra-Asian sectors; the first was shared between the two - the Europeans importing Western manufactures and exporting Asian produce
and the Chinese doing the reverse. The intra-Asian trade was the monopoly of the Chinese. The Chinese and European merchants therefore were complementary and not competitive, and they were linked by credit granted by the Europeans to the Chinese. Although occasional frauds sometimes imposed stresses on this relationship it was usually harmonious. Section 3 (Chapters V, VI and VII) The growth of Straits
Settlements trade in the period 1870-1915 reflected the economic phenomena of the time. These included the rapid industrialization of Europe and the United States, the brief period of free trade which was followed by a return to protectionism, and great advances in transport and communication. The influence of Western price movements on the values of Straits Settlements trade is discernible but it was more than balanced by the effects of currency depreciation in the colony which insulated it from the Great Depression of 1873-1896. The expansion of the
European powers in Southeast Asia introduced law and order. Under the new conditions, and stimulated by Western demands for foodstuffs and raw materials, the regions of Southeast Asia made rapid gains in output, which was reflected in the expansion of the colony's trade. The introduction and the development of the para rubber industry at the end of the nineteenth century helped to swell even further the values of imports and exports in the twentieth. The analysis of distribution of Straits Settlements trade shows that the flow of trade from East-to-West was more valuable than the reverse flow of West-to-East while the intra-Asian flow also exceeded that of the West-to East.
Malaya became the most important region trading
with the Straits Settlements by the end of this period
while Indonesia retained its strong commercial ties. The colony's trade with Indochina was severely affected by the imposition of restrictive tariffs but the trade with Siam, Burma, British Borneo and the rest of Southeast Asia did not show any significant changes. Its trade with South and East Asia was, however, on the decline. Exports to Britain, Europe and the United States increased much more rapidly than imports from these regions, but its trade with the last two regions grew faster than its trade with
Britain. The analysis of commodities in the colony's trade bears out these observations in the regional distribution: the value of commodities in the East-to-West flow increased more rapidly than that of commodities in the reverse flow. The importance of tin in the nineteenth century and that of rubber by the twentieth can be clearly seen, while cotton piece goods declined proportionately in terms of total
trade. In the intra-Asian flow the outstanding change was the decline of the trade in opium. The origin and destination of commodities did not change appreciably except in such commodities as coal and petroleum, in which the Western sources were replaced by Asian ones. The growing importance of Malaya to the Straits Settlements, both as a source of supplies and as a market, is, also evident. Section 4 (Chapters VIII and IX) The merchants of the day argued vehemently about the effects on trade of the Straits Homeward Conference and the depreciation of the colony's currency. The alleged detrimental effects of these factors are not supported by the statistical evidence.
It is in fact very possible that these factors made positive contributions to trade: the conference made possible an excellent shipping service which complemented the harbour facilities of Singapore while the depreciating currency prevented the transmission to the colony of the price fall in the West. Section 5 (Chapter X) This study brings out the dominating
importance of external factors in the trade of the Straits Settlements, which in many ways can be regarded as a barometer recording changes in its environs and in places as far removed as Europe and the United States. This was due primarily to the entrepot character of the greatest part of its trade. Secondly, the development of close economic ties with its hinterland greatly strengthened the position of the colony. Thirdly, it was the political stability of the colony which enabled it to profit from the economic developments that took place in this period.